NOTICE OF THE 62ND ANNUAL GENERAL MEETING OF SHAREHOLDERS

Transcription

1 NOTICE OF THE 62ND ANNUAL GENERAL MEETING OF SHAREHOLDERS Time and Date: 1:00 p.m., Sunday, March 26, 2017 (JST) (The reception desk will open at 12:30 p.m., JST.) Venue: Orion, Hilton Tokyo Odaiba (1st Floor), 1-9-1, Daiba, Minato-ku, Tokyo Agenda: Election of seven (7) directors Stock Code: 6817

2 Table of Contents Notice of the General Meeting of Shareholders Notice of the 62nd Annual General Meeting of Shareholders 1 Concerning the Exercise of Voting Rights Reference Materials for Annual General Meeting of Shareholders Agenda: Election of seven (7) directors 4 Attached Documents to the Notice of the General Meeting of Shareholders Business Report 1. Matters Concerning the Current Status of the Sumida Group Matters Concerning the Company 26 Consolidated Financial Statements 42 Non-consolidated Financial Statements 46 Audit Report 50

3 This is a translation of the original notice in Japanese. In the event of any discrepancy, the original notice in Japanese shall prevail. (Stock Code: 6817) March 3, 2017 NOTICE OF THE 62ND ANNUAL GENERAL MEETING OF SHAREHOLDERS Dear Shareholders, SUMIDA CORPORATION (the Company ) hereby would like to inform you that the 62nd Annual General Meeting of Shareholders will be held as outlined below. Please accept our cordial invitation to this meeting. If you are unable to attend the meeting in person, you may exercise your voting rights in writing or via the Internet. Please examine the appended Reference Materials for Annual General Meeting of Shareholders and exercise your voting rights in accordance with the instructions given on page 3. Yours faithfully, Shigeyuki Yawata Director, Representative Executive Officer and CEO SUMIDA CORPORATION Harumi Island Triton Square Office Tower X 14/F, Harumi, Chuo-ku, Tokyo 1. Time and Date: 1:00 p.m., Sunday, March 26, 2017 (JST) (The reception desk will open at 12:30 p.m., JST.) 2. Venue: Orion, Hilton Tokyo Odaiba (1st Floor), 1-9-1, Daiba, Minato-ku, Tokyo 3. Meeting Agenda: - Items to be reported 1. Business Report, Consolidated Financial Statements and reports on the audited results of the Consolidated Financial Statements by the independent auditors and the Audit Committee for the 62nd term (January 1 to December 31, 2016) 2. Non-consolidated Financial Statements for the 62nd term (January 1 to December 31, 2016) - Item to be resolved Agenda: Election of seven (7) directors 1

4 4. Decisions Made for the Notice of the Meeting (1) If a shareholder does not indicate acceptance or rejection of the agenda items when exercising a voting right in writing or via the Internet, the Company will treat such cases as indications of acceptance. (2) In the event that a shareholder exercises a voting right via the Internet, even if the voting form is returned to us by mail, the Company will treat the shareholder s vote via the Internet as the effective exercise of the voting right. (3) If a shareholder exercises a voting right in writing, the shareholder is requested to return the voting form to us by mail by 5:00 p.m. on Friday, March 24, 2017 (JST). (4) If a shareholder exercises a voting right via the Internet, the shareholder is requested to do so by 5:00 p.m. on Friday, March 24, 2017 (JST). (5) In the event that a shareholder exercises voting rights diversely, the shareholder is requested to submit his/her intention to do so and the reason for the diverse exercise of voting rights to the Company in writing by three days before the meeting. *If attending the meeting in person, please hand in the enclosed voting form, completed, to the receptionist at the meeting. In the interest of saving resources, please bring this notice with you to the meeting. *The information contained in this notice has been disclosed on the Company s website before dispatching this notice with the objective of providing the information promptly. *If the Reference Materials for Annual General Meeting of Shareholders, Business Report, and Non-consolidated and Consolidated Financial Statements are subsequently revised, the revisions shall be posted on the Company s website ( * Please note that the Company is not planning to hold any company presentation or reception after the meeting. 2

5 <Concerning the Exercise of Voting Rights> * Shareholders attending the meeting in person are requested to submit the voting form enclosed with this notice at the reception desk on the day of the meeting. * A shareholder may exercise his/her voting rights by designating one proxy who is another shareholder of the Company with voting rights pursuant to Article 17 of the Articles of Incorporation. In such cases, please submit to the Company a document proving the proxy s power of representation (power of attorney). * If you are unable to attend the meeting in person, please exercise your voting rights using either of the below methods. [Exercising Voting Rights by Mail] After indicating your acceptance or rejection of the agenda items on the voting form enclosed with this notice, return it without affixing a stamp. Votes to be received by: 5:00 p.m., Friday, March 24, 2017 (JST) [Exercising Voting Rights via the Internet] Please access the Website for Exercising Voting Rights ( with a computer, smartphone, or mobile phone, and enter the log-in ID and temporary password shown on the voting form enclosed with this notice. Follow the instructions given on the screen to indicate your acceptance or rejection. Votes to be given by: 5:00 p.m., Friday, March 24, 2017 (JST) 1. Please note that shareholders are to bear any and all telecommunications charges, including call charges, and connection charges to be paid to Internet service providers when accessing the Website for Exercising Voting Rights. 2. For shareholders who intend to exercise voting rights via mobile phones or smartphones, please note that it may not be possible to do so using certain models. 3. In the event that a shareholder exercises a voting right on multiple occasions via the Internet, the Company will treat the shareholder s final vote as the effective exercise of the voting right. Please direct any inquiries you may have concerning the exercise of voting rights via the Internet to: Shareholders Register Manager: Transfer Agent Department (Help Desk), Mitsubishi UFJ Trust and Banking Corporation Tel: (Toll-free, available only in Japan) Operating hours: 9:00 a.m. to 9:00 p.m. (JST) [To All Institutional Investors] In the event that you apply for the use of the platform for electronic exercise of voting rights (the so-called TSE platform) operated by ICJ, you may use it as your electronic method for exercising voting rights at the Company s General Meetings of Shareholders, in addition to the above-mentioned electronic methods via the Internet. 3

6 Reference Materials for Annual General Meeting of Shareholders Agenda: Election of seven (7) directors The terms of office of seven (7) directors will expire at the conclusion of this Annual General Meeting of Shareholders. The Company hereby requests the election of seven (7) directors including six (6) outside directors as nominated by the Nomination Committee. The candidates for the directors positions are as follows. Six (6) of the candidates for director, namely Messrs. Johji Sato, Pak Hong Auyang, Soichiro Uchida, Yukihiro Moroe, Atsushi Kato and Michael Mühlbayer, seek the positions as outside directors as stipulated in Article 2, Paragraph 3, Item 7 of the Ordinance for Enforcement of the Companies Act. [Reference] List of candidates No. Name Positions and duties at the Company 1 Shigeyuki Yawata Director (Chairman of the Board of Directors), Representative Executive Officer and CEO, member of the Nomination Committee and Compensation Committee and Chairman of the Risk Management Committee 2 Johji Sato 3 Pak Hong Auyang 4 Soichiro Uchida Director, Chairman of the Audit Committee and member of the Risk Management Committee Director, Chairman of the Nomination Committee and Compensation Committee Director, member of the Nomination Committee, Compensation Committee and Risk Management Committee 5 Yukihiro Moroe Director and member of the Audit Committee 6 Atsushi Kato Director and member of the Audit Committee 7 Michael Mühlbayer Director and member of the Nomination Committee [Re-election] [Re-election] [Outside] [Independent] [Re-election] [Outside] [Independent] [Re-election] [Outside] [Independent] [Re-election] [Outside] [Independent] [Re-election] [Outside] [Independent] [Re-election] [Outside] [Independent] 4

7 No. 1 Re-election Name (Date of birth) Shigeyuki Yawata (October 28, 1951) Rate of attendance at the Board of Directors meetings in FY2016: 6/6 Brief personal profile and positions and duties at the Company (Important concurrent occupations or positions at other organizations) (Brief personal profile) Nov Joined the Company Mar Director Mar Representative Director and Senior Managing Director Apr Representative Director and Vice President Mar Representative Director and President Apr Director, Representative Executive Officer and CEO (To date) (Positions and duties at the Company) Director (Chairman of the Board of Directors), Representative Executive Officer and CEO, member of the Nomination Committee and Compensation Committee, and Chairman of the Risk Management Committee (Important concurrent occupations or positions at other organizations) Managing Director, SUMIDA Europe GmbH Number of shares held in the Company 258,000 <Reasons for the selection of candidates nominated for director> Mr. Shigeyuki Yawata possesses abundant experience and a proven track record in regard to not only his service in the executive management of the Group but also his role in operating and developing global business operations. The Company proposed him as a candidate for director because it expects Mr. Yawata not only to offer his extensive insight regarding the electronic components industry but also to continue to strengthen the function of the Board of Directors as he has served the executive management role in the Company of Representative Executive Officer and CEO. 5

8 No. 2 Re-election/ Outside/ Independent Name (Date of birth) Johji Sato (November 20, 1953) Rate of attendance at the Board of Directors meetings in FY2016: 6/6 Brief personal profile and positions and duties at the Company (Important concurrent occupations or positions at other organizations) (Brief personal profile) Apr Joined Chuo Coopers & Lybrand Associates, Inc. Sep Assigned to London Office, Coopers & Lybrand UK (Currently PricewaterhouseCoopers LLP) Oct Partner (International Corporate Tax Division), London Office, Coopers & Lybrand UK (Currently PricewaterhouseCoopers LLP) Jul Lead Partner (Japanese Business Group in Europe, the Middle East and Africa), London Office, Coopers & Lybrand UK (Currently PricewaterhouseCoopers LLP) Jul Chair Partner, Japanese Business Steering Committee, Central Cluster (Europe, the Middle East, Africa and India), PricewaterhouseCoopers LLP May 2012 Executive Senior Director (Global Japanese Business), PricewaterhouseCoopers Co., Ltd. Mar Outside Director of the Company (To date) (Positions and duties at the Company) Director, Chairman of the Audit Committee and member of the Risk Management Committee Number of shares held in the Company <Reasons for the selection of candidates nominated for outside director> Mr. Johji Sato has been involved in the provision of advice regarding taxation and investment to global corporations over many years, and has held various posts including partner at PricewaterhouseCoopers LLP. The Company proposed him as a candidate for outside director because it expects him to oversee and check management based on the managerial knowledge and experience that he has accumulated throughout his career, especially in the fields of accounting and taxation. He currently serves as outside director of the Company. The length of his service as outside director will be four (4) years at the conclusion of this Annual General Meeting of Shareholders. 0 6

9 No. 3 Re-election/ Outside/ Independent Name (Date of birth) Pak Hong Auyang (December 24, 1967) Rate of attendance at the Board of Directors meetings in FY2016: 6/6 Brief personal profile and positions and duties at the Company (Important concurrent occupations or positions at other organizations) (Brief personal profile) Sep Joined Computime Group Limited Sep CEO, Computime Group Limited Nov Chairman, Vida Nova Ventures Jul Co-CEO & Executive Director, Touchmedia Mar Outside Director of the Company (To date) Dec CEO, Altis Technology Limited (To date) (Positions and duties at the Company) Director, Chairman of the Nomination Committee and Compensation Committee (Important concurrent occupations or positions at other organizations) CEO, Altis Technology Limited Outside Director, Grayhill Hong Kong Company Limited Director, QVIVO Limited Director, Greenlink Global Limited Number of shares held in the Company <Reasons for the selection of candidates nominated for outside director> Mr. Pak Hong Auyang was engaged in the management of electronic control products manufacturer Computime Group Limited of Hong Kong, and currently serves as a manager or director at Asian companies mainly in China and Hong Kong. The Company proposed him as a candidate for outside director because it expects him to oversee and check management based on the knowledge and experience as a corporate executive that he has accumulated throughout his career, and his insight into the Asian market. He currently serves as outside director of the Company. The length of his service as outside director will be four (4) years at the conclusion of this Annual General Meeting of Shareholders. 0 7

10 No. 4 Re-election/ Outside/ Independent Name (Date of birth) Soichiro Uchida (November 8, 1953) Rate of attendance at the Board of Directors meetings in FY2016: 6/6 Brief personal profile and positions and duties at the Company (Important concurrent occupations or positions at other organizations) (Brief personal profile) Mar Joined NOK CORPORATION Jun Director, NOK CORPORATION Jun Senior Managing Director, SYNZTEC Co., Ltd. Jun Representative Director & President, SYNZTEC Co., Ltd. Apr Adviser, NOK CORPORATION Mar Outside Director of the Company (To date) (Positions and duties at the Company) Director, member of the Nomination Committee, Compensation Committee and Risk Management Committee Number of shares held in the Company <Reasons for the selection of candidates nominated for outside director> Mr. Soichiro Uchida has served as director of NOK CORPORATION for many years and engaged in the management of SYNZTEC Co., Ltd. The Company proposed him as a candidate for outside director because it expects him to oversee and check management based on the knowledge and experience as a corporate executive that he has accumulated throughout his career, and his insight into the automotive components industry. He currently serves as outside director of the Company. The length of his service as outside director will be three (3) years at the conclusion of this Annual General Meeting of Shareholders. 0 8

11 No. 5 Re-election/ Outside/ Independent Name (Date of birth) Yukihiro Moroe (July 18, 1955) Rate of attendance at the Board of Directors meetings in FY2016: 6/6 Brief personal profile and positions and duties at the Company (Important concurrent occupations or positions at other organizations) (Brief personal profile) Nov Joined The Nomura Securities Co., Ltd. Jul Joined Goldman Sachs Japan Nov Managing Director, Goldman Sachs Japan Aug Representative Director, YUME Capital Co., Ltd. (To date) Representative Director, Itohan Japan Co., Ltd. (To date) Jun Outside Corporate Auditor, Oisix Inc. (To date) Mar Outside Director of the Company (To date) (Positions and duties at the Company) Director, member of the Audit Committee (Important concurrent occupations or positions at other organizations) Representative Director, YUME Capital Co., Ltd. Representative Director, Itohan Japan Co., Ltd. Outside Corporate Auditor, Oisix Inc. Number of shares held in the Company <Reasons for the selection of candidates nominated for outside director> Mr. Yukihiro Moroe has accumulated a wealth of experience in the financial industry over many years, and currently engages in management and serves as director and outside corporate auditor at several companies. The Company proposed him as a candidate for outside director because it expects him to oversee and check management based on the experience and insight that he has accumulated throughout his career. He currently serves as outside director of the Company. The length of his service as outside director will be three (3) years at the conclusion of this Annual General Meeting of Shareholders. 0 9

12 No. 6 Re-election/ Outside/ Independent Name (Date of birth) Atsushi Kato (April 14, 1943) Rate of attendance at the Board of Directors meetings in FY2016: 5/6 Brief personal profile and positions and duties at the Company (Important concurrent occupations or positions at other organizations) (Brief personal profile) Apr Established a tax accountant office, Director Oct Joined Tokyo Office, Coopers & Lybrand Jul Partner, Tokyo Office, Coopers & Lybrand Jul Representative Partner, Chuo Audit Corporation (later ChuoAoyama Audit Corporation, a PricewaterhouseCoopers member firm) due to a merger Jul Part-time member, Accounting Standards Board of Japan (ASBJ) Sep Representative Partner, PricewaterhouseCoopers Aarata (currently, PricewaterhouseCoopers Aarata LLC, a PricewaterhouseCoopers member firm) Feb Representative Director and President, Control Solutions International, Inc. Apr Full-time Member, Accounting Standards Board of Japan (ASBJ) Apr Full-time Vice Chairman, Accounting Standards Board of Japan (ASBJ) Apr Certified Public Accountant, Atsushi Kato Certified Public Accountant Office (To date) Mar Outside Director of the Company (To date) Jun Outside Audit & Supervisory Board Member, UNIZO Holdings Company, Limited (To date) (Positions and duties at the Company) Director, member of the Audit Committee (Important concurrent occupations or positions at other organizations) Certified Public Accountant, Atsushi Kato Certified Public Accountant Office Outside Audit & Supervisory Board Member, UNIZO Holdings Company, Limited Number of shares held in the Company <Reasons for the selection of candidates nominated for outside director> Mr. Atsushi Kato has been involved in the provision of advice and activities regarding finance, audit, internal control and International Financial Reporting Standards (IFRS) for global corporations over many years, and has held various posts including partner at Coopers & Lybrand (C&L). The Company proposed him as a candidate for outside director because it expects him to oversee and check management based on the managerial knowledge and experience that he has accumulated throughout his career, especially in the fields of accounting and taxation. He currently serves as outside director of the Company. The length of his service as outside director will be two (2) years at the conclusion of this Annual General Meeting of Shareholders. 0 10

13 No. 7 Re-election/ Outside/ Independent Name (Date of birth) Michael Mühlbayer (February 22, 1955) Rate of attendance at the Board of Directors meetings in FY2016: 6/6 Brief personal profile and positions and duties at the Company (Important concurrent occupations or positions at other organizations) (Brief personal profile) Oct Joined Daimler AG Apr Manager, Treasury Control, MTU Friedrichshafen GmbH, Daimler AG Group Apr Executive Vice President, TEMIC TELEFUNKEN Mikroelektronik GmbH, Daimler AG Group Nov Executive Vice President, New York Office, Mercedes-Benz Credit Corp, U.S., Daimler AG Group Nov Executive Vice President, Detroit Office, Chrysler Financial Corp, U.S. Aug Senior Vice President (Treasury), DaimlerChrysler AG Jul Senior Vice President (Investor Relations & Treasury), Daimler AG Mar Outside Director of the Company (To date) (Positions and duties at the Company) Director, member of the Nomination Committee Number of shares held in the Company <Reasons for the selection of candidates nominated for outside director> Mr. Michael Mühlbayer has been involved in finance of Daimler AG, a German automobile manufacturer, over many years. The Company proposed him as a candidate for outside director because it expects him to oversee and check management based on the knowledge and experience as a corporate executive that he has accumulated throughout his career, especially in the field of finance, and his insight into the automobile and electric and electronics industries and the European and U.S. markets. He currently serves as outside director of the Company. The length of his service as outside director will be two (2) years at the conclusion of this Annual General Meeting of Shareholders. 0 Notes: 1. SUMIDA Europe GmbH is a subsidiary of the Company. Among other things, the Company loans funds to the subsidiary. 2. There are no special interest relationships between the candidates and the Company. 3. If the six (6) candidates for outside director, Messrs. Johji Sato, Pak Hong Auyang, Soichiro Uchida, Yukihiro Moroe, Atsushi Kato and Michael Mühlbayer, are elected as originally proposed, the Company plans that these persons will be independent directors in accordance with the provisions of the Tokyo Stock Exchange. Reasons for the selection: Seven (7) of the candidates nominated for director, Messrs. Shigeyuki Yawata, Johji Sato, Pak Hong Auyang, Soichiro Uchida, Yukihiro Moroe, Atsushi Kato and Michael Mühlbayer, have sufficiently served as directors who determine basic management policies and supervise operations. The Company therefore requests to reelect them as directors. Reasons for the selection of candidates nominated for outside director, independence as outside directors and the explanation of liability limitation contracts with outside directors are as follows. (1) Reasons for the selection of candidates nominated for outside director The Company is a company employing a committee-based corporate governance structure, called a company with nomination committee, etc. At a company with nomination committee, etc., the board of directors specializes in supervising management, while a committee made up of a majority of outside directors is established to improve the transparency of management and executive officers are installed as an organ to work full-time for the execution of operations. Thus, a company with nomination committee, etc. clearly separates supervision of management from execution of operations to make them function effectively. Such a company generally needs to elect multiple outside 11

14 directors. To further enhance the functions of the board of directors, the Company is to make outside directors account for a majority of directors, and hereby requests the election of six (6) outside directors. (2) Independence of candidates for outside director (i) None of the candidates for outside director have been managing members of the Company or business operators that have specific relations with the Company in the past. (ii) None of the candidates for outside director have received or plan to receive a large amount of money or other property from the Company or business operators that have specific relations with the Company. (iii) None of the candidates for outside director have relatives in the third degree or closer with managing members of the Company or business operators that have specific relations with the Company. (3) Liability limitation contracts with outside directors The Company has entered into liability limitation contracts with the candidates for outside director of the Company, Messrs. Johji Sato, Pak Hong Auyang, Soichiro Uchida, Yukihiro Moroe, Atsushi Kato and Michael Mühlbayer. (Outline of the contracts is stated on pages 33 of the Business Report.) In case of their re-election, the Company will continue the above liability limitation contracts with them. 12

15 Business Report for the 62nd term (January 1 to December 31, 2016) Shigeyuki Yawata Director, Representative Executive Officer and CEO SUMIDA CORPORATION 13

16 Business Report (January 1 to December 31, 2016) 1. Matters Concerning the Current Status of the Sumida Group (1) Business conditions for the fiscal year under review (i) Progress and results of the business Looking at the global economy in the current fiscal year, despite major changes, such as the U.S. presidential election and decision by the U.K. to leave the EU, which may shake the existing framework of the world, steady growth has been seen, managing risks including the economic slowdown in China and European banking crisis. In the electronic devices market, the situation around consumer electronics related products has been characterized by the slowing growth of smartphones sales, stagnant tablets sales, and an absence of the powerful market driver in place of smartphones. In the industry-related products sector, supported by the aggressive investments by semiconductor manufacturers and robust performance in the automotive sector, demand for machine tools and robots has been stable. The subdued demand for construction machinery in the first half of the fiscal year showed some signs of recovery in the second half, as the problem of excess inventory in China has been resolved. Meanwhile, demand for automotive-related electronic components grew, due to the strong new car sales in North America and Europe as well as unit sales growth in China fueled by tax-cuts for small cars. In addition, the increasingly stringent emission regulations, which followed emissions scandals, resulted in an increase in demand for electronic components in the areas of technologies to improve fuel efficiency, development of EV and PHEV, and others, creating demand which surpasses the growth in the number of automotive sales. Given these circumstances, the Group strengthened the production system to significantly reduce impact on profit by fluctuations of foreign exchange through further promotion of local production for local consumption, further promoted automated production at China factories to raise productivity, and started operations at Vietnam No. 2 factory (outskirts of Da-Nang). The Group also started to increase personnel and strengthen capacity of our R&D staff to promote the development of products for the future. Although net sales were steady in general on the local currency basis in the current fiscal year, the impact of yen appreciation, approximately 10% higher than the previous fiscal year in terms of the average yen exchange rates against the U.S. dollar ( yen per U.S. dollar) and the euro ( yen per euro), was significant. As a result, net sales for the current fiscal year decreased by 6.0% year on year to 81,052 million yen. Meanwhile, operating income increased by 34.4% year on year to 5,696 million yen, owing to the lowered cost of sales and selling, general and administrative expenses by the stronger yen, reflecting the Group s high share of overseas operation, including production, in addition to a freezing of minimum-wage increases in some areas in China and reduction in raw materials prices such as copper. Ordinary income increased by 45.2% year on year to 4,805 million yen, despite foreign exchange losses caused by sharp fluctuations in foreign exchange rates. Profit attributable to owners of parent increased by 51.9% year on year to 3,087 million yen. 14

17 (Reporting segment information) The following is the business performance in the current fiscal year by reporting segment. 1) Asia Pacific Business In the Asia Pacific Business, despite the healthy demand for automotive-related products in North America and other regions, sales of products for smartphones were weak and the yen significantly appreciated against the U.S. dollar. Consequently, net sales for the current fiscal year decreased by 9.4% year on year to 47,827 million yen. Segment profit increased by 26.7% year on year to 5,227 million yen. 2) EU Business In the EU Business, demand for automotive-related products was robust, owing to a further advance in automotive electrification, favorable new car sales in the United States and Europe, and other factors. However, amid the continued yen appreciation against the euro, net sales decreased by 0.6% year on year to 33,225 million yen. Segment profit increased by 21.7% year on year to 2,596 million yen. Business segment Net sales (million yen) Asia Pacific Business 47,827 EU Business 33,225 Total 81,052 (Reference) Looking at the composition of sales by market, the share of sales derived from automotive-related products increased, while the share of sales derived from consumer electronics related products and industry-related products declined from the previous fiscal year. 15

18 (ii) Fund procurement 1) Loan commitment agreements In order to raise working capital effectively, the Group has concluded a bilateral commitment line agreement with 1 of its financing banks and has concluded loan commitment agreements with 8 of its financing banks amounting during the current fiscal year. Unused loan commitments at the end of the current fiscal year are as follows: As of December 31, 2016 (million yen) Total amount specified in loan commitment 4,000 agreements Outstanding borrowings Balance 4,000 2) Global commitment line agreements In order to make it possible to raise working capital effectively, the Company has concluded global commitment line agreements with 5 of its financing banks. Unused global commitment lines based on the said agreements at the end of the current fiscal year are as follows: As of December 31, 2016 (million yen) Total amount specified in global commitment 3,600 line agreements Outstanding borrowings Balance 3,600 (iii) Plant and equipment investment The Group continuously makes investments to expand facilities and enhance research and development for rationalization of production, quality improvement and increasing demand. For the current fiscal year, total investment amounted to 4,508 million yen, including constant investments related to the development and manufacturing of new products, enhancement of automotive-related facilities to meet active demand, and production automation and expansion of facilities in China. (iv) Acquisition or disposal of shares, other stakes or stock acquisition rights of other companies SUMIDA AG After the Group fulfilled demand of purchasing shares by shareholders, the percentage of SUMIDA AG shares held by the Sumida Group increased to % from %. Accordingly, the ratio of shareholding in subsidiaries of the company by the Sumida Group also increased. 16

19 (2) Summary of assets, profit and losses 59th term (ended Dec. 2013) 60th term (ended Dec. 2014) 61st term (ended Dec. 2015) 62nd (current) term (ended Dec. 2016) Net sales (million yen) 63,893 77,563 86,236 81,052 Operating income (million yen) 1,698 3,345 4,237 5,696 Profit (loss) attributable to owners of parent (2,008) 1,346 2,032 3,087 (million yen) Basic earnings (loss) per share (yen) (91.41) Total assets (million yen) 56,743 70,110 67,876 67,034 Net assets (million yen) 14,510 17,724 18,669 19,903 Net assets per share (yen) ROE (Return On Equity) (%) Notes: 1. Basic earnings (loss) per share is calculated based on the average number of shares issued in each fiscal term and net assets per share is calculated based on the total number of shares issued at the end of each fiscal term. In calculating basic earnings (loss) per share and net assets per share, treasury shares are excluded from the total average number of shares issued during each fiscal term and from the total number of shares issued at the end of each fiscal term. 2. Amendments to IAS19 were published on June 16, 2011 and have taken effect from the fiscal year which had started from January 1, Accordingly, starting from the 59th term (2013), the amended IAS19 was applied to a part of the consolidated subsidiaries. in million JPY 17

20 18

21 (3) Significant matters of the parent company and subsidiaries (i) Parent company There were no relevant issues. (ii) Significant subsidiaries Company name Sumida Electronic Components Co., Ltd. Sumida Electric Co., Ltd. Sumida Corporate Service Incorporated Sumida Power Technology Co., Ltd. Dongguan Sumida (Tai Ping) Electric Co., Ltd. SUMIDA ELECTRIC (GUANGXI) CO., LTD. Sumida Electric (H.K.) Company Limited SUMIDA TRADING PTE. LTD. SUMIDA AMERICA COMPONENTS INC. SUMIDA TRADING (SHANGHAI) COMPANY LIMITED TAIWAN SUMIDA TRADING COMPANY LIMITED SUMIDA TRADING (KOREA) COMPANY LIMITED Capital (in thousand) Voting rights of the Company (%) 19 Key business 50,000 yen 100 Control of the Asia Pacific Business 450,000 yen 100 (100) Manufacture, sale and research & development of coils 25,000 yen 100 Control of Group management 301,000 yen 305,000 Hong Kong dollars 17,561 yuan 255,000 Hong Kong dollars 6,000 Singapore dollars 6,350 U.S. dollars 8,070 yuan 30,000 Taiwan dollars 2,000,000 Korea won 100 (100) 100 (100) 100 (100) 100 (100) 100 (100) 100 (100) 100 (100) 100 (100) 100 (100) Manufacture and sale of coils Manufacture of coils Manufacture of coils Manufacture and research & development of coils Sale of coils Sale of coils Sale of coils Sale of coils Sale of coils SUMIDA Europe GmbH 25 euro 100 Control of the EU Business SUMIDA Components euro Manufacture and sale of coils GmbH (97.8) SUMIDA AG SUMIDA Components & Modules GmbH SUMIDA EMS GmbH SUMIDA Lehesten GmbH SUMIDA COMPONENTS DE MEXICO, S.A. DE C.V. SUMIDA ROMANIA S.R.L. SUMIDA electronic Shanghai Co., Ltd. SUMIDA Slovenija, d.o.o. 7,344 euro 25 euro 25 euro 1,100 euro 50 Mexico peso 3,101 euro 37,904 yuan 503 euro 97.8 (97.8) 97.8 (97.8) 97.8 (97.8) 97.8 (97.8) 72.3 (72.3) 97.8 (97.8) 97.8 (97.8) 72.3 (72.3) Intermediate holding company of the EU Business Manufacture, sale and research & development of coils Controlling company of EMS EMS Manufacture of coils Manufacture of coils Manufacture and sale of coils Manufacture of coils

22 Company name vogtronics GmbH SUMIDA flexible connections GmbH SUMIDA FLEXIBLE CONNECTIONS ROMANIA S.R.L. Sumida Electric (Thailand) Co., Ltd. ISMART GLOBAL LIMITED Capital (in thousand) 25 euro 25 euro 156 euro 140,000 baht Voting rights of the Company (%) 72.3 (72.3) 97.8 (97.8) 97.8 (97.8) 100 (100) Key business Manufacture and sale of coils Manufacture and sale of flat cables Manufacture and sale of flat cables Development, manufacture and sales of power electronics related coils 6,308 euro 100 Intermediate holding company Sumida Finance B.V. 20 euro 100 Financial control company SUMIDA ELECTRONIC VIETNAM CO., LTD. 2,000 U.S. dollars 100 (100) Manufacture of coils Sumida Electric (Changde) Co., Ltd. 8,796 yuan 100 (100) Manufacture of coils Sumida Electric (JI AN) Co., Ltd. Guangzhou Sumida Electric Co., Ltd. Sumida Technologies Inc. SUMIDA Electronic SuQian Co., Ltd. SUMIDA ELECTRONIC QUANG NGAI CO., LTD. Sumida Insurance Corporation 60,628 yuan 129,394 yuan 200 Canadian dollars 4,500 yuan 2,000 U.S. dollars 100 (100) 100 (100) 100 (100) 97.8 (97.8) 100 (100) 5,000 U.S. dollars 100 Manufacture of coils Manufacture of coils Research & development of coils Manufacture of coils Manufacture of coils Control and management of group insurance Notes: 1. Figures shown in parentheses in the column of voting rights are the percentages held indirectly. 2. Details of the specified wholly owned subsidiary as of December 31, 2016 are as follows. Name of specified wholly owned subsidiary Sumida Electronic Components Co., Ltd. Address of specified wholly owned subsidiary Book value of shares for specified wholly owned subsidiaries of the Company, and for specified wholly owned subsidiaries of the Company s wholly owned subsidiaries Total assets of the Company Harumi Island Triton Square Office Tower X 14/F, Harumi, Chuo-ku, Tokyo 14,461 million yen 44,100 million yen 3. SUMIDA TRADING (KOREA) COMPANY LIMITED increased its capital during the current fiscal year. 4 As all of SUMIDA TRADING COMPANY LIMITED s business (sale of coils) was transferred to Sumida Electric (H. K.) Company Limited on January 1, 2016, it has been excluded from significant subsidiaries. 20

23 (4) Issues to address (i) Chaotic global situation The global situation is marked by events such as the U.S. presidential election result and the U.K. s decision to leave the EU, which are causing significant change that could rock the current global framework. The situation is chaotic due to widespread concerns about negative economic impacts of weakening emerging market currencies with the appreciation of the U.S. dollar backed by the U.S. economic policies. However, the potential growth ability in the emerging economies has not changed; their economic growth which is increasing their significance as sales markets beyond their historical positioning as production locations remains unchanged. Given these circumstances, the Group will have to adjust its planning approach so that the Group s actions are quickly responsive to changes and trends as they emerge. (ii) Improving corporate value (Business expansion into new fields) The Company will leverage its expertise to develop products for new applications in automotive-related products and specialize in growth segments with an emphasis on profitability in consumer electronics related products. Moreover, it will seek business expansion in the industry-related products sector, focusing on the fields of industrial equipment, energy, medical and healthcare, identification systems, security, lighting, etc. (Sales) In addition to the automotive-related business, the Company will focus on expanding the U.S. sales of high technology applications such as energy, medical and security related areas which have extremely high potential for growth and expanding China sales by strengthening design-in capabilities and re-engineering the distribution system within China to expand business with Chinese manufacturers. (Manufacturing) The Sumida Group will further accelerate the automation of production lines, which the Group has been promoting for some time, particularly for automotive-related products with long product life cycles and lower volume fluctuations. Moreover, the Group will strengthen its overall purchasing power through unification of the procurement system and focus on a single contact window to suppliers, expediting the global optimization of suppliers. The Sumida Group will lower direct labor costs by continuously promoting the transfer of production to low cost sites, primarily satellite plants, in accordance with the Sumida Silk Road strategy. Combined with the on-going development of and transfer of production to new low cost sites in both Asia and Europe, the Group believes that even greater reductions in direct labor costs will be possible. The Group will strive for manufacturing cost reduction by further promoting low cost operations at its manufacturing bases. (Development) The Sumida Group will work to reconstruct its development structure, accelerate personnel expansion and development of new products and production technology, develop products targeted at highly profitable markets, and carry out market launches. (Finance) The Sumida Group will continuously estimate cash flow of the whole Group, and based on the estimation, use cash pooling to utilize efficient cash management and accelerate repayment of 21

24 debts. Furthermore, the Group will raise capital efficiency through reducing inventory and improving accounts receivable and payable terms. (iii) Continuing focus on corporate governance Developments in the Japanese business environment show that the Company s focus is correct. The basics of the Company s corporate governance are to maintain transparency and efficiency of management, meet the expectations of stakeholders and continuously improve the corporate value, which it recognizes as being one of the most important issues for its management. In particular, the role of governance under a system in which execution and supervision are segregated through delegation of substantial authority for executing operations is extremely important. The Company always tries to develop a system in which both duties function effectively and efficiently to realize more suitable governance. (iv) Pursuing corporate social responsibility Also of continuing importance to the Company is corporate social responsibility. Under the existing circumstances, in which companies need to fulfill legal, economic and social responsibilities more than ever, and in which they need to actively contribute to society and make concrete actions, the Group fulfills its social responsibilities by performing business based on basic principles such as integrity, discipline and common sense, and at the same time makes broad efforts to further enhance the trust that society places in it through measures including reinforcement of the legal and compliance functions and active commitment to environmental and social issues. (5) Major business lines (as of December 31, 2016) Lines of business Asia Pacific Business EU Business Key products DC/DC converter transformers, switching power supply transformers, stroboscopical oscillating transformers, noise filter coils, DC/DC converter units, power inductors, IFT/RF coils, keyless entry antenna coils, ADSL modem transformers, data line filters, antenna coils, video filters, signal inductors, RF-ID, four-way valve coils, CCFL driving inverter transformers, ABS coils, injection coils, antenna coils, sensor coils, noise filers, solenoid coils for automotive air conditioner, high-frequency transformers, high-frequency choke coils, edge-wise coils, stick coils, motor coils for HDD, low-frequency transformers, harmonic preventive reactors, reactors, common mode coils Antenna coils, sensor coil modules, ignition coil modules, noise filters, xdsl splitter modules, DC/DC converter transformers, keyless entry antenna coils, Xenon igniters, power steering control units, GPS antennas, anti-theft control units, diesel engine control units, power supplies, high-frequency transformers, high-frequency choke coils, edge-wise coils, stick coils, motor coils for HDD, low-frequency transformers, harmonic preventive reactors, reactors, common mode coils 22

25 (6) Major business offices of the Sumida Group (as of December 31, 2016) Headquarters: Chuo-ku, Tokyo (the Company) Business supervising companies: Sumida Electronic Components Co., Ltd. (Chuo-ku [Tokyo]), SUMIDA Europe GmbH (Germany), SUMIDA AG (Germany), Sumida Corporate Service Incorporated (Chuo-ku [Tokyo]), Sumida Finance B.V. (Netherlands), SUMIDA INSURANCE CORPORATION (Micronesia) Domestic sales offices: Sumida Electric Co., Ltd. (Saitama-shi [Saitama], Kawasaki-shi [Kanagawa], Osaka-shi, Nagoya-shi, Natori-shi [Miyagi], Komoro-shi [Nagano]), Sumida Power Technology Co., Ltd. (Ueda-shi [Nagano]) Overseas sales offices: Sumida Electric (H.K.) Company Limited (Hong Kong), SUMIDA TRADING PTE. LTD. (Singapore), SUMIDA AMERICA COMPONENTS INC. (U.S.), SUMIDA Components GmbH (Germany), SUMIDA TRADING (SHANGHAI) COMPANY LIMITED (China), SUMIDA Components & Modules GmbH (Germany), vogtronics GmbH (Germany), SUMIDA Lehesten GmbH (Germany), SUMIDA flexible connections GmbH (Germany), SUMIDA TRADING (KOREA) COMPANY LIMITED (South Korea), TAIWAN SUMIDA TRADING COMPANY LIMITED (Taiwan), Sumida Electric (Thailand) Co., Ltd. (Thailand), SUMIDA electronic Shanghai Co., Ltd. (China) Domestic production bases: Sumida Electric Co., Ltd. (Mutsu-shi [Aomori]), Sumida Power Technology Co., Ltd. (Ueda-shi [Nagano]) Overseas production bases: Sumida Electric (H.K.) Company Limited (Hong Kong), Dongguan Sumida (Tai Ping) Electric Co., Ltd. (China), SUMIDA Components GmbH (Germany), SUMIDA Components & Modules GmbH (Germany), SUMIDA ROMANIA S.R.L. (Romania), SUMIDA COMPONENTS DE MEXICO, S.A. DE C.V. (Mexico), SUMIDA Slovenija, d.o.o. (Slovenia), SUMIDA Lehesten GmbH (Germany), SUMIDA electronic Shanghai Co., Ltd. (China), SUMIDA flexible connections GmbH (Germany), SUMIDA ELECTRIC (GUANGXI) CO., LTD. (China), Sumida Electric (Thailand) Co., Ltd. (Thailand), SUMIDA FLEXIBLE CONNECTIONS ROMANIA S.R.L. (Romania), SUMIDA ELECTRONIC VIETNAM CO., LTD. (Vietnam), Sumida Electric (JI AN) Co., Ltd. (China), Sumida Electric (Changde) Co., Ltd. (China), Guangzhou Sumida Electric Co., Ltd. (China), SUMIDA Electronic SuQian Co., Ltd. (China), SUMIDA ELECTRONIC QUANG NGAI CO., LTD. (Vietnam) Domestic R&D centers: Sumida Electric Co., Ltd. (Natori-shi [Miyagi], Saitama-shi [Saitama], Komoro-shi [Nagano]) 23

26 Overseas R&D centers: Sumida Electric (H.K.) Company Limited (Hong Kong), SUMIDA AMERICA COMPONENTS INC. (U.S.), SUMIDA Components GmbH (Germany), SUMIDA Components & Modules GmbH (Germany), SUMIDA flexible connections GmbH (Germany), Sumida Technologies Inc. (Canada) (7) Employees (as of December 31, 2016) (i) Employees of the Sumida Group Business segments Number of employees Changes from the end of the previous fiscal year Asia Pacific Business 16,223 Increase by 973 EU Business 3,495 Increase by 100 Company-wide (common) 103 Decrease by 9 Total 19,821 Increase by 1,064 Notes: 1. The number of employees is the number of persons who engage in work in the Sumida Group. 2. Company-wide (common) indicates the number of employees posted in Sumida Corporate Service Incorporated which carries out a headquarter and support function, in Sumida Electric (H.K.) Company Limited and in the Service Department of Sumida Electric Co., Ltd. 3. The number of employees includes those in the consigned processing companies. (ii) Employees of the Company The Company is a pure holding company and it has no employees. (8) Major lenders (as of December 31, 2016) Lenders Amount borrowed (million yen) Sumitomo Mitsui Banking Corporation 8,932 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 4,549 Resona Bank, Limited 4,038 Sumitomo Mitsui Trust Bank, Limited 3,182 Mizuho Bank, Ltd. 2,988 24

27 (9) Policy on determination of dividend of surplus The Company s basic policy for the return of profits to shareholders is to deliver dividends in consideration of a consolidated dividend payout ratio (25% to 30%) with top priority on the profit distribution through dividends. Regarding the payment method of dividends, the Company pays quarterly the amount obtained by dividing the amount of scheduled annual dividend into quarters. In addition, in order to have dividends reflect the consolidated business results, if the dividend amount calculated according to the consolidated dividend payout ratio (25% to 30%) exceeds the scheduled amount of annual dividend, it is the Company s policy to add the excess amount to the year-end dividend. Regarding the annual dividend in the current fiscal year, the Company decided to pay the scheduled annual dividend at 24 yen per share at the beginning of the fiscal year, and paid 6 yen in each quarter from the first quarter through the third quarter of the current fiscal year. As the dividend amount calculation result, which reflects the consolidated business results, exceeded the scheduled amount of annual dividend of 24 yen set at the beginning of the fiscal year, the Company plans to submit to the meeting of the Board of Directors to be held on February 21, 2017 the proposal to pay a year-end dividend of 16 yen per share, that will in effect add the above excess amount to the scheduled annual dividend. Consequently, the amount of annual dividend for the fiscal year ended December 31, 2016 shall be 34 yen per share. Details of dividend of surplus for the current fiscal year are as follows: Date of Board of Directors resolution Term Total amount of dividends (million yen) Dividend per share (yen) Record date Date of commencement of payment April 27, 2016 The 1st quarter March 31, 2016 May 31, 2016 July 28, 2016 The 2nd quarter June 30, 2016 August 26, 2016 October 28, 2016 The 3rd quarter September 30, 2016 November 30, 2016 February 21, 2017 The 4th quarter December 31, 2016 March 6, 2017 Note: Pursuant to Article 459 of the Companies Act, the Company stipulates in the Articles of Incorporation that it shall be entitled to allocate dividends of surplus on predetermined record dates (March 31, June 30, September 30 and December 31) by a resolution of the Board of Directors. 25

28 2. Matters Concerning the Company (1) Shares of the Company (as of December 31, 2016) (i) Number of shares issuable: 70,000,000 shares (ii) Total number of shares issued: 23,944,317 shares (including treasury shares) (iii) Number of shareholders as of December 31, 2016: 6,006 (iv) Major shareholders (top 10 shareholders, excluding treasury shares) Name of shareholders Number of stock held (thousand shares) Ratio of the number of stock held (%) Yawata Building Co., Ltd. 4, Japan Trustee Services Bank, Ltd. (Trust Account) 1, The Master Trust Bank of Japan, Ltd. (Trust Account) 1, Japan Trustee Services Bank, Ltd. (Trust Account 9) Yawata Zaidan Limited BBH BOSTON CUSTODIAN FOR JAPAN EQUITY PR EMIUM FUND OF CREDIT SUISSE UNIVER BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC) Masakazu Matsuo Japan Trustee Services Bank, Ltd. (TDK Corporation Retirement Benefit Trust Account reentrusted by Sumitomo Mitsui Trust Bank, Limited) CHASE MANHATTAN BANK GTS CLIENTS ACCOUNT ESCROW Notes: 1. Although the Company holds 733,599 shares of treasury shares, it is excluded from the list of major shareholders above. 2. The ratio of the number of stock held has been calculated excluding treasury shares. (v) Other significant matters concerning shares There were no relevant issues at the end of this fiscal year. 26